US markets advance as bond market signals caution

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NEW YORK – Stocks rise at the start of trading on Wall Street on Thursday. The S&P 500 is up 0.8% and on pace for a rare winning week. Companies that benefit the most from a healthy economy have led the way, including commodity producers. Energy stocks did better after oil prices recouped some of their big losses from earlier in the week. The bond market is still signaling concern of a potential recession, and a new report shows more workers have applied for unemployment benefits than expected. The two-year Treasury yield is higher than the 10-year yield, a relatively rare thing seen by some investors as a bad omen.

THIS IS A BREAKING NEWS UPDATE. AP’s previous story follows below.

NEW YORK – Wall Street rose Thursday ahead of two days of U.S. jobs data that could offer clues about how employers are handling spiraling costs and rising interest rates, with the Federal Reserve continuing an aggressive push to bring inflation under control.

Dow Jones Industrials futures rose 0.5% and S&P 500 futures gained 0.4%. Lower oil prices have somewhat alleviated inflation concerns.

Shares in Europe rose on a day when British Prime Minister Boris Johnson announced that he was resigning in the middle a flood of resignations from members of his conservative party.

Oil prices rose slightly but remain below $100 a barrel.

Investors fear aggressive rate hikes in the US and Europe containing the rise in prices which has reached its highest level in four decades could depress global economic activity.

“Stocks have risen because commodity and oil prices are collapsing,” said Stephen Innes of SPI Asset Management. “Both are the critical targets that Fed policy is designed to tame; therefore, inflation expectations are under control.

On Thursday, the Labor Department releases its weekly jobless claims report, which typically tracks the number of layoffs in the United States. On Friday, the more detailed June jobs report, which will give investors a more detailed look at how certain sectors of the economy are handling high inflation for four decades and rapidly rising interest rates.

The labor market has remained very strong in the aftermath of the coronavirus outbreak, but there are signs that the landscape could become more challenging.

On Wednesday, the Labor Department reported that U.S. employers announced fewer jobs in May amid signs of a weakening economy, though overall demand for workers remained strong.

At noon, the FTSE 100 in London gained 1.3%, the DAX in Frankfurt gained 1.6% and the CAC 40 in Paris advanced 1.5%.

In Asia, the Shanghai Composite Index rose 0.3% to 3,364.40 and the Nikkei 225 in Tokyo gained 1.5% to 26,490.53. The Hang Seng in Hong Kong closed 0.3% higher at 21,643.58 after spending much of the day in negative territory.

Seoul’s Kospi climbed 1.8% to 2,334.27 and Sydney’s S&P-ASX 200 rose 0.8% to 6,648.00.

The Indian Sensex advanced 0.7% to 54,107.97. New Zealand fell while Southeast Asian markets rose.

Wednesday, the The Fed released notes at the last meeting, stating that “an even more restrictive stance might be appropriate” to bring inflation back to its 2% target. Fed officials have acknowledged that this could weaken the economy.

Major US indexes closed higher after the Fed’s release on Wednesday.

The The Fed raised its key interest rate last month by three-quarters of a point to a range of 1.5% to 1.75%, the biggest increase in nearly three decades. Chairman Jerome Powell suggested at the time that a rate hike of half or three-quarters of a point, three times the Fed’s usual margin, was likely when policymakers meet later this month.

Notes released Wednesday following the June 14-15 Fed meeting confirmed that other officials had agreed such an increase would be “likely appropriate.”

Inflation was boosted by Russia’s attack on Ukraine, which drove up the prices of oil and other raw materials, and Chinese anti-virus controls which shut down Shanghai and other industrial centers and disrupted supply chains.

Oil prices closed below $100 a barrel on Tuesday for the first time since early May, but U.S. crude is still up more than 30% this year.

Benchmark U.S. crude gained 96 cents to $99.49 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost 97 cents to $98.53 a barrel on Wednesday. Brent crude, the price basis for international trade, rose 91 cents to $101.60 a barrel in London. It fell from $2.08 the previous session to $100.69.

The dollar fell to 135.63 yen from 135.98 yen on Wednesday. The Euro rose slightly to $1.0194 from $1.0182.

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